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Monday, 23 February 2015 08:17

Why Internet Providers Will Still Make Out Like Bandits Even With Net Neutrality

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anexfinityComcast and other internet monopolizers will continue to make an "xfinity" of profits, even if net neutrality is preserved. (Photo: Mike Mozart)

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Comcast, the most dreaded customer service and internet cable provider in the nation, will soon control more than half the US cable and internet market - if the FCC approves its merger with Time Warner Cable, which it is likely to do. According to The Guardian: 

And in the meantime cable cutters [persons who are no longer subscribing to cable TV] bemoaning their lack of choice face an even more consolidated market. If the Comcast/Time Warner deals goes through, according to the FCC’s measures some 63% of US consumers will only have one choice of broadband provider.

Proponents of net neutrality like Neil Hunt, chief product officer at Netflix, have previously bemoaned the lack of competition among internet service providers.

“The reality in this country is that we don’t really have competition for which cable provider you really get your broadband from,” Hunt told the Guardian last year. And as such, if companies like Netflix want to reach consumers in all parts of the US, they have to find a way to work with the particular providers servicing those individual areas.

Comcast, which owns NBC and Universal pictures, is a juggernaut. According to Philadelphia Magazine, Comcast generated $68 billion in 2014. It, like the other few major players in cable and the internet (including AT&T), has consolidated internet, cable television and phone services, through investing in fiber optic cables and then reaping windfall profits by acquiring smaller providers and increasing monthly charges to consumers. Although cable subscribers in the US are reportedly decreasing due to the increased diversity of entertainment and news offerings on the internet - as well as frequently shoddy service and high "packaged" pricing for cable - providers such as Comcast are making up for it by charging high fees for fast broadband. 

For instance, in the Chicago area, Comcast offers 50 Mpbs bandwidth for $78.95. That's nearly $1000 a year for an internet speed that many other nations surpass. Yet, even though Comcast and other internet providers will not charge more for sites to use faster "lanes," pending the FCC vote outcome, they are still making a fortune off of the internet. How? Because even if the FCC classifies the internet as a common carrier, making it subject to regulations like phone companies, it will not affect what the internet providers (who are now essentially the cable providers) charge consumers for faster speeds.

Eliminating net neutrality would allow a windfall of increased profitability for the likes of Comcast. However, even with net neutrality in place, profitability is still likely to soar on the basis of consumer payments, investments, and other internet revenue - for example, Comcast is developing enhanced charges for data use that exceeds a certain threshold. What worries giants like Comcast are cities such as Chattanooga, Tennessee. As Business Insider reported in 2014:

The southern city of Chattanooga, Tennessee, with a population of about 170,000, boasts internet speeds up to a whopping gigabit per second, thanks to a local municipal fiber internet network, and has since last year. That's the same speed as Google Fiber, only there's no legacy tech giant pumping technology into the project.

The city of Chattanooga and the publicly owned electric utility EPB did it by themselves.

Big telecom companies like AT&T and Comcast put off plans to outfit southeastern Tennessee with high-speed internet, essentially forcing the city to look for internet solutions elsewhere, Motherboard reports. This is actually a trend. Though Chattanooga's internet is notable for its blinding speed, many small communities around the country are similarly taking on high-speed internet without the help of big-name ISPs.

The few cable/internet giants, however, want to keep Chattanooga and other smaller cities, towns and non-profits from providing services that they don't want to invest in - or that could give ideas to large governmental entities to provide a service that is essential to creating and supporting local business at a faster speed and lower rate. As Business Insider reported: 

In fact, often the ISPs are holding these neglected communities back. In 2011 Longmont, Colorado, passed a ballot referendum that lifted a 2005 state law stopping municipalities from selling services that rely on publicly owned infrastructures, the Denver Post reported. Cable companies like Comcast originally pushed for the law in 2005 because they felt it was "unfair to let tax-supported entities compete with tax-paying businesses," the Post said.

More than 20 states still have laws like this one on the books, Motherboard reported. The FCC recently said it would help small communities get past these laws if it meant faster internet for them.

ALEC has been involved in pushing templated state legislation to prohibit government units from creating better and more economical internet infrastructures. There are two troubling issues presented by this effort to stop public entities from providing a better and cheaper service. First, the larger for-profits don't want to invest in rural and small city internet systems, because the return on investment is not high. Secondly, given the relative slowness of US internet speeds - and their high cost - Comcast and other providers are worried that any service that provides for commercial and personal internet needs more quickly, more efficiently and at a lower cost might catch on in bigger cities and even on state levels. 

Hopefully, the FCC will soon reclassify the internet as a common carrier and preserve equal access to readers of all websites. That is vital to the maintaining of robust news outlets that get beyond the "manufactured consent" of status-quo corporate media.

However, if you want to know why companies such as Comcast won't be dealt a grievous financial hit by the formalization of net neutrality, just consider the headline of a recent Huffington Post article: "Time Warner Cable's 97 Percent Profit Margin on High-Speed Internet Service Exposed."

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